China Medical Technologies Inc. founder and ex-CEO Xiaodong Wu and Ex-CFO Tak Yung Samson Tsang are charged with securities fraud, wire fraud conspiracy, and securities fraud conspiracy. The two men are accused of bilking the company’s noteholders and investors of over $400M. They are now fugitives and live in China.
Investors thought they were getting involved in a medical device company that was listed on NASDAQ. Funds were supposed to be invested in China Medical or used to buy back existing debt. However, according to the US Attorney’s Office for the Eastern District of New York, Tsang and Wu misrepresented how proceeds raised via two note offerings would be used and then stole investors’ money. They sent the funds to entities that they were either affiliated with or controlled.
The indictment said that between 1/2005 and 11/2012, Tsang, Wong, and a co-conspirator ran this securities scam and made material misrepresentations and omissions about the investments. To facilitate their fraud, the then-executives caused a China Medical outside auditor and independent director to step down, ceased issuing public disclosures about how material events were impacting security values, and stopped paying interest on the notes.
Not long after, China Medical filed for bankruptcy protection. Of the two convertible bonds that were used to raise the $426M—a $276M offering and a $150M offering—approximately $246.5M and $150M, respectively, are still outstanding.
Regardless of whether a criminal or civil case has been brought against a fraudster—including a class action securities case—it is important that you retain an experienced securities fraud law firm that can help you file your own claim and advocate on your behalf. At THE SSEK Partners Group, we have helped thousands of investors in recouping their investment fraud losses. Contact us today.